Net revenue for the fourth quarter increased 9.4% to $549.5 million, compared to $502.3 million in the fourth quarter last year, largely reflecting revenue from the American Airlines launch and eCommerce growth of 7.2%. This was partially offset by 49 fewer Lands’ End Shops at Sears, which resulted in a net revenue decline from Sears operations of $21.5 million. Excluding the impact from Sears operations, net revenue would have increased by 14.3%.

U.S. eCommerce revenue growth of 7.4% was driven by increased demand for key items and a growth in new customer acquisition.

Gross margin increased by approximately 90 basis points to 39.8% as compared to 38.9% in the fourth quarter last year primarily due to a more disciplined promotional strategy.

Selling and administrative expenses decreased to 30.8% of total net revenue compared to 31.3% in the fourth quarter last year.

Net income was $25.5 million or $0.78 earnings per diluted share, as compared to $16.2 million or $0.50 earnings per diluted share in the fourth quarter of fiscal 2018.

Adjusted EBITDA(1) grew by 29.7% to $49.3 million compared to $38.0 million in the fourth quarter of fiscal 2018.

The American Airlines shipments totaled approximately $40.0 million in the fourth quarter with the remainder of the launch expected to be delivered in the first quarter of fiscal 2020. The full launch is now anticipated to total between $45.0 million to $47.0 million.

Subsequent to the fourth quarter, announced new partnership with Kohl’s to distribute the entire product assortment through Kohls.com and a seasonally focused product assortment to 150 stores starting in Fall 2020.

Jerome Griffith, Chief Executive Officer and President, stated, “First and foremost, we are closely monitoring the Coronavirus situation and our thoughts are with all of those affected. In regard to Fiscal 2019, it was an incredible year both in terms of financial performance and strategic accomplishments. We delivered strong revenue and Adjusted EBITDA growth for the fourth quarter and the year, illustrating our continued progress across our core growth strategies. We also successfully completed the American Airlines’ uniform launch to over 50,000 employees in early March. We are pleased to share that we have announced a new partnership with Kohl’s to distribute Lands’ End through Kohls.com and to 150 retail doors, starting in Fall 2020, providing a meaningful opportunity to expand brand awareness and drive incremental sales. Looking ahead, as we navigate through this challenging environment, we remain focused on continuing the execution of our key strategies.”

Full Year Fiscal 2019 Highlights:

Net revenue for fiscal 2019 and fiscal 2018 was flat at $1.45 billion. Excluding the net revenue decline from Sears operations of $75.3 million, net revenue would have increased by 5.4%.

Selling and administrative expenses were slightly down at 37.5% of total net revenue compared to Fiscal 2018.

Net income was $19.3 million, or $0.60 earnings per diluted share. This compares to Net income of $11.6 million or $0.36 earnings per diluted share in fiscal 2018.

Adjusted EBITDA(1) grew by 10.6% to $77.9 million compared to $70.5 million in fiscal 2018.

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents were $77.1 million as of January 31, 2020, compared to $193.4 million as of February 1, 2019. The reduction was primarily due to the $100.0 million voluntary prepayment of the term loan in the First Quarter 2019.

Net cash provided by operations was $27.3 million for the 52 weeks ended January 31, 2020, compared $48.2 million for the 52 weeks ended February 1, 2019. The decrease was a direct result of the timing of the American Airlines launch.

Inventory was $375.7 million as of January 31, 2020, and $321.9 million as of February 1, 2019. The increase was primarily driven by the launch of the American Airlines business.

The Company had $151.7 million of availability under its asset-based senior secured credit facility and had $378.7 million of Long-term debt, net as of January 31, 2020.

Jim Gooch, Chief Operating Officer and Chief Financial Officer, stated, “Looking ahead, we will build on the strategies that enabled us to deliver a successful fiscal 2019. As it pertains to the Coronavirus pandemic, we announced that we have closed our 26 U.S Company Operated stores through March 29th. We have adjusted our business operations to provide customers our full eCommerce and customer service experience, while ensuring the safety of our employees. However, we have seen a negative impact on customer demand over the past week, as expected, given the concerns related to the Coronavirus. Based on the macro uncertainty and rapidly changing business environment in the U.S., we will not be issuing guidance for fiscal 2020 at this time.”

Conference Call

The Company will host a conference call on Tuesday, March 17, 2020, at 8:30 a.m. ET to review its fourth quarter and fiscal 2019 financial results and related matters. The call may be accessed through the Investor Relations section of the Company's website at http://investors.landsend.com or by dialing (866) 753-5836.

About Lands' End, Inc.

Lands' End, Inc. (NASDAQ:LE) is a leading uni-channel retailer of casual clothing, accessories, footwear and home products. We offer products online at www.landsend.com, on third party online marketplaces and through retail locations. We are a classic American lifestyle brand with a passion for quality, legendary service and real value, and seek to deliver timeless style for women, men, kids and the home.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding expectations as to and assessment of progress executing growth strategies and achieving its long-term financial targets; expectations as to the amount and timing of revenue associated with the American Airlines launch; the timing and expected benefits of the relationship with Kohl’s; and the expected impact of the coronavirus. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: we may be unsuccessful in implementing our strategic initiatives, or our initiatives may not have their desired impact on our business; our ability to offer merchandise and services that customers want to purchase; changes in customer preference from our branded merchandise; our results may be materially impacted if tariffs on imports from China increase and we are unable to offset the increased costs from current or future tariffs through pricing negotiations with our vendor base, moving production out of China, passing through a portion of the cost increases to the customer, or other savings opportunities; customers' use of our digital platform, including customer acceptance of our efforts to enhance our e-commerce websites; customer response to our marketing efforts across all types of media; our maintenance of a robust customer list; the impact of COVID-19 or other pandemics; our retail store strategy may be unsuccessful and we may be unable to open retail stores in locations and on terms that are acceptable to us; our dependence on information technology and a failure of information technology systems, including with respect to our e-commerce operations, or an inability to upgrade or adapt our systems; fluctuations and increases in costs of raw materials; impairment of our relationships with our vendors; our failure to maintain the security of customer, employee or company information; our failure to compete effectively in the apparel industry; the condition of the lending and debt markets, at the time we seek to refinance our term loan; legal, regulatory, economic and political risks associated with international trade and those markets in which we conduct business and source our merchandise; our failure to protect or preserve the image of our brands and our intellectual property rights; increases in postage, paper and printing costs; failure by third parties who provide us with services in connection with certain aspects of our business to perform their obligations; our failure to timely and effectively obtain shipments of products from our vendors and deliver merchandise to our customers; reliance on promotions and markdowns to encourage customer purchases; our failure to efficiently manage inventory levels; unseasonal or severe weather conditions; the adverse effect on our reputation if our independent vendors do not use ethical business practices or comply with applicable laws and regulations; assessments for additional state taxes; incurrence of charges due to impairment of goodwill, other intangible assets and long-lived assets; the impact on our business of adverse worldwide economic and market conditions, including economic factors that negatively impact consumer spending on discretionary items; potential indemnification liabilities to Sears Holdings pursuant to the separation and distribution agreement in connection with our separation from Sears Holdings; the ability of our principal shareholders to exert substantial influence over us; potential liabilities under fraudulent conveyance and transfer laws and legal capital requirements; and other risks, uncertainties and factors discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended February 1, 2019. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.

1 Adjusted EBITDA - In addition to our Net income, for purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), which is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our business, as well as for executive compensation metrics, for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items.

The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.

While Adjusted EBITDA1 is a non-GAAP measurement, management believes that they are important indicators of operating performance, and useful to investors, because:

EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax.

Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations.

For the 13 and 52 weeks ended January 31, 2020 and February 1, 2019, we excluded the impacts of the transfer of corporate functions, including severance and contract losses associated with a transition of certain corporate activities from our New York office to our Dodgeville headquarters and the closure of school uniform showrooms.

For the 13 and 52 weeks ended January 31, 2020 we excluded the impacts of non-cash write down of certain long-lived assets.

For the 13 and 52 weeks ended January 31, 2020 and February 1, 2019, we excluded the impacts of gain or loss on property and equipment as management considers the gains or losses on asset valuation to result from investing decisions rather than ongoing operations.